Foreign market doors open again for AMCs, SEBI allows investment in foreign stocks


New Delhi. There is good news for Asset Management Companies (AMCs). Market regulator SEBI has once again allowed AMCs to invest in foreign stocks. There has been some change in the rules for investing in foreign stocks. The mutual fund industry’s hopes of raising the limit of $7 billion in foreign funds investment are still not met. Sources said that asset management companies will now be able to invest in international stocks only to the extent they were managing the international assets with them as on February 1, 2022. This means that the reduction in their AUM due to corrections or redemptions in international stocks will now be able to make up for them through fresh investments. For example, if an asset management company had invested Rs 100 in international stocks till February 1, 2022 and now its AUM is Rs 80, then under the new rules, it can invest Rs 20 more.

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good initiative
Nilesh Shah, MD, Kotak Mahindra AMC, has described this step as a proper step in the right direction. He says that stocks are now available at a much lower valuation than in February 2022. With SEBI allowing AMUs to invest in foreign stocks, they will now be able to buy shares at a lower price. Nilesh Shah says that SEBI has indirectly increased this foreign investment limit in a way.

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Retail investors will benefit
In February this year, investment in international stocks in the Indian mutual fund industry reached $7 billion. After this many AMCs stopped fresh investments in international funds. Eros Aziz, Deputy CEO, Anand Rathi Wealth, says that LRS is the permanent medium of investment in international stocks. Many HNIs were investing more than the LRS limit in foreign stocks with the help of mutual funds. As far as retail investors are concerned, this step taken by SEBI is very good. This will give an opportunity to the fund manager to include stocks that are undervalued due to the current circumstances in his portfolio.

Tags: Mutual fund, SEBI, stock market


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